When does a UAE freight forwarder become liable as a carrier?

Article 199 of the 2023 Maritime Law classifies freight forwarders as principal carrier, intermediary, or commission agent, and the classification determines whether the forwarder is jointly liable for cargo loss

A freight forwarder that arranges the movement of goods from origin to destination does not, by default, carry those goods. The forwarder books vessel space, arranges trucking, handles customs documentation, and coordinates warehouse storage. The shipper assumes the forwarder is an intermediary. The carrier assumes the forwarder is an agent.

The problem arises when the forwarder issues its own bill of lading (a "house B/L"), contracts with the shipper as the party responsible for the entire transit, selects the sub-carriers without the shipper's involvement, or undertakes carriage in its own name rather than in the name of the shipper. At that point, the forwarder stops being an intermediary and becomes a contractual carrier, with all the liability that status carries.

Federal Decree-Law No. 43 of 2023 on Maritime Law, effective 29 March 2024, codifies this distinction for the first time in UAE law. Article 1 defines freight forwarding as a contract whereby a person undertakes on behalf of the consignor to carry out all or any of the work necessary to handle and transport cargoes, whether the forwarder performs these works "in its personal name and for the benefit of the Consignor" or "in the name and for the benefit of the latter." Article 199 then categorises the forwarder based on its actual role in the transaction.

• Article 199 classifies freight forwarders into three categories. A forwarder that undertakes the carriage itself is treated as a "principal carrier" and bears carrier liability for loss, damage, and delay. A forwarder that arranges carriage through third-party carriers acts as an intermediary or commission agent and bears a different, narrower liability. The classification is determined by the forwarder's conduct and contractual position, not by what the forwarder calls itself in its terms and conditions.
• Freight forwarders now bear joint liability for cargo damage alongside the actual carrier. Under the new law, when a forwarder contracts as a principal carrier or multimodal transport operator, it is jointly liable with the actual carrier that physically moves the goods. Both parties can invoke limitation provisions, but neither can escape liability by pointing to the other.
• The Dubai Court of Appeal confirmed joint liability in May 2024. In Commercial Appeals Nos. 106/2023 and 111/2023, the court ruled that a Dubai-based freight forwarder (acting as a multimodal contractual carrier) and the actual sea carrier were jointly liable for the total value of a damaged cargo shipment. Both lost the right to limit liability because the court found their conduct reckless and their awareness of likely damage established. The forwarder was liable under its multimodal carriage contract. The sea carrier was liable in tort. The judgment ordered both to pay the full value of the goods, carriage fees, economic losses, and legal fees.
• Cargo claims must be filed within one year (Article 187). The clock runs from the date of delivery or the date delivery should have taken place. Recourse claims against third parties (for example, the forwarder's claim against the actual carrier) must be filed within 90 days of the main claim filing or the date of payment, whichever applies. These deadlines are hard. A shipper that discovers damage and waits 13 months to file loses the claim entirely.
• The Commercial Transactions Law (FDL No. 50 of 2022) fills gaps where the Maritime Law is silent. For non-maritime legs of a multimodal transport (road haulage within the UAE, for example), the commercial agency and transport provisions of the Commercial Transactions Law apply. The forwarder's liability on the land leg may be governed by different rules and limitation periods than the maritime leg.

Who this applies to

This article is for freight forwarders, NVOCC operators, logistics companies, shippers, cargo insurers, and their legal teams. It is relevant to any company that uses a freight forwarder to move goods through UAE ports, whether inbound, outbound, or in transit. For companies structuring their logistics contracts in the UAE, the distinction between agent and principal carrier should be addressed in every forwarding agreement.

For disputes involving damaged or lost goods while in storage (as opposed to in transit), our article on warehouse operator liability covers the separate legal framework that applies to warehouse operators.

The three roles of a freight forwarder under UAE law

What triggers principal carrier status

The courts look at conduct, not labels. A freight forwarder's standard terms may describe it as an "agent" or "intermediary," but if its actual behaviour matches the profile of a carrier, the court will treat it as one. The following factors push a forwarder toward principal carrier classification:

Issuing a house bill of lading. A house B/L issued in the forwarder's name, covering the entire transit from origin to destination, is the strongest indicator that the forwarder has contracted as the carrier. The shipper holds a transport document issued by the forwarder, not by the vessel operator. The shipper's contract of carriage is with the forwarder.

Quoting a single through-rate. If the forwarder quotes one price for the entire door-to-door movement and does not break out the individual carrier charges, the shipper is paying the forwarder for carriage, not for agency services. The forwarder's margin is the difference between the through-rate and the cost of the sub-carriers. This is a carrier's commercial model, not an agent's.

Selecting sub-carriers without shipper approval. An agent acts on the principal's instructions. A carrier selects its own means of performance. If the forwarder chooses the vessel, the trucker, and the warehouse without consulting the shipper, the forwarder is exercising carrier discretion.

Taking custody of the goods. A forwarder that receives goods into its own warehouse, consolidates shipments, deconsolidates at destination, and delivers to the consignee has physical custody at multiple points. Custody is a hallmark of carrier responsibility.

Contracting in its own name. If the forwarder's contracts with the vessel operator, the trucker, and the warehouse are in the forwarder's name (not the shipper's name), the forwarder is the contracting party on the transport chain. The shipper cannot claim directly against sub-carriers that it has no privity with.

The Dubai court ruling: Commercial Appeals 106/2023 and 111/2023

This 2024 ruling illustrates how the liability framework operates in practice.

Facts. A Dubai-based food and beverage company purchased two 40-foot containers of antioxidant drinks from a Dutch supplier. The company engaged a Dubai freight forwarder to collect, ship, and deliver the containers to its warehouse in Dubai under a multimodal carriage agreement. The forwarder instructed its agent in the Netherlands to collect the goods. The agent issued a clean house B/L. The goods were loaded onto a container vessel at Rotterdam.

After departure, the vessel's master received instructions to divert to Singapore instead of transshipping at an intermediate port for Jebel Ali. The diversion added weeks to the transit. By the time the containers arrived in Dubai, the drinks had consumed more than 50% of their seven-month shelf life. Dubai Municipality's Health and Safety Department rejected the shipment on the grounds that imported consumer products must have at least 50% shelf life remaining at entry. The shipper was given two options: destroy the cargo or re-export it.

Ruling. The Dubai Court of Appeal held the freight forwarder (multimodal contractual carrier) and the actual sea carrier jointly liable. The court found that both parties acted recklessly and were aware of the likely damage from the diversion. Because of this recklessness, both forfeited their right to limit liability. The judgment ordered them to pay the full value of the goods, the multimodal carriage fees, economic losses, legal fees, and attorney fees.

Significance. The forwarder was liable as a contractual carrier under its multimodal carriage agreement with the shipper. The sea carrier was liable in tort to the cargo owner. Joint liability meant the shipper could recover the full amount from either party. The forwarder could not escape by arguing it was an intermediary because it had issued a house B/L, contracted for the entire transit, and selected the sea carrier.

Limitation of liability

A freight forwarder classified as a principal carrier can invoke the same limitation of liability available to carriers under the Maritime Law. Article 83 of FDL No. 43 of 2023, read with the LLMC 1996 Protocol (which the UAE has implemented), sets limits calculated in Special Drawing Rights (SDR) based on the vessel's gross tonnage.

For cargo claims specifically, the package limitation applies: the carrier's (and by extension the forwarder's) liability is capped at a specified SDR amount per package or per kilogram of gross weight, whichever is higher. Carriers and shippers can agree on higher limits, but not lower ones.

When limitation is lost. The right to limit liability is forfeited if the party acted recklessly with knowledge that damage would probably result. This is what happened in the 2024 Dubai ruling: the court found the forwarder and the sea carrier both acted with awareness that the diversion would damage the cargo, so neither could limit.

A forwarder acting as a commission agent or intermediary does not benefit from carrier limitation. Its liability is governed by the general provisions of the Commercial Transactions Law and the Civil Code, which do not provide package limitation. An intermediary forwarder's exposure is the actual loss caused by its negligence, without a statutory cap. This can make intermediary status more expensive than carrier status in high-value cargo cases where the forwarder's negligence caused the loss.

Multimodal transport: the forwarder as through-carrier

Article 1 of the Maritime Law defines multimodal transport as transport under one B/L using two or more different modes, at least one of which is maritime. A freight forwarder that issues a multimodal transport document covering a door-to-door movement (truck from the supplier's factory to the origin port, vessel to the UAE, truck to the consignee's warehouse) is the multimodal transport operator (MTO). The MTO is responsible for the entire transit under a single contract.

The MTO's liability for loss or damage depends on where in the transit the loss occurred:

• If the loss is localised to a specific transport leg (for example, damage during the sea voyage), the law governing that leg applies. For the maritime leg, the Maritime Law and its limitation provisions apply.
• If the loss cannot be localised to a specific leg (for example, concealed damage discovered only at final delivery), the Maritime Law's cargo liability provisions apply to the entire transit because the maritime leg is the "main stage" or one of the main stages.

The MTO has recourse against the actual carrier responsible for the leg where the damage occurred. Recourse claims must be filed within 90 days of the main claim filing or the date of payment (Article 187). Missing this 90-day window is a common and costly error for forwarders who settle a cargo claim and then delay their recovery action against the sub-carrier.

Time bars

What freight forwarders should do

• Define the role in the contract. Every forwarding agreement should state whether the forwarder acts as a carrier, a commission agent, or a disclosed agent. The contract language alone does not determine classification (conduct matters more), but clear language reduces ambiguity and sets expectations for both parties.

• Understand the consequences of issuing a house B/L. A house B/L issued in the forwarder's name is the single strongest factor pushing the forwarder into carrier classification. If the forwarder does not intend to assume carrier liability, it should arrange for the actual carrier to issue the B/L directly to the shipper.

• Maintain cargo insurance and professional indemnity cover. A forwarder acting as a principal carrier faces the same loss exposure as a shipping line. Cargo insurance covers the goods. Professional indemnity (errors and omissions) insurance covers the forwarder's liability for negligence in arranging transport, documentation, and customs clearance. A mid-sized Dubai-based forwarder handling AED 200 million in annual cargo value should carry professional indemnity cover of at least AED 5-10 million.

• Comply with the 90-day recourse deadline. When a cargo claim is received, the forwarder's first action (after acknowledging the claim and beginning its investigation) should be to put the actual carrier and any other sub-contractors on notice. The recourse claim must be filed within 90 days. Missing this deadline means the forwarder bears the full loss with no recovery.

• Audit standard terms against the Maritime Law. Many UAE-based forwarders use FIATA or BIFA standard terms, or bespoke terms drafted before the 2023 Maritime Law came into force. These should be reviewed to ensure they reflect the current legal framework, including the joint liability provisions, the limitation regime, and the time bar periods.

What shippers should do

• Know who the carrier is. Before booking a shipment, confirm whether the forwarder is contracting as the carrier or as an agent. Ask for the identity of the actual carrier. Check whether the B/L will be issued by the forwarder (house B/L) or by the vessel operator (master B/L). This determines who the shipper's contract of carriage is with and who is liable for cargo loss.

• Inspect goods on delivery and notify damage immediately. Under the Maritime Law, the consignee must give written notice of loss or damage at the time of delivery (for apparent damage) or within 3 days of delivery (for non-apparent damage). Failure to give timely notice creates a presumption that the goods were delivered in good condition, shifting the burden of proof to the shipper.

• File cargo claims within one year. The one-year time bar under Article 187 is strict. Courts will not hear a claim filed after this deadline unless the shipper can demonstrate a legally admissible excuse, which UAE courts interpret narrowly.

How should UAE logistics companies manage freight forwarder liability in 2026?

The 2023 Maritime Law settled a question that the old law left open: a freight forwarder that contracts as a carrier is liable as a carrier, jointly with the actual carrier that moves the goods. The Dubai court's 2024 ruling confirmed this in practice, stripping both the forwarder and the sea carrier of limitation rights when their conduct was reckless. For forwarders, the commercial incentive to issue house B/Ls and quote through-rates remains strong. The legal consequence of doing so is now codified.

For maritime and logistics lawyers in Dubai advising freight forwarders, shippers, and cargo insurers, the 2023 Maritime Law and the emerging case law under it require a fresh review of forwarding agreements, insurance cover, and claims procedures.

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